Brazil's economy of extremes

Wednesday

Feb 6, 2013 at 6:00 AMFeb 6, 2013 at 9:16 AM

By Marcus Goncalves

I recently returned from Brazil, and while observing the hustle and bustle of Rio's international airport, busier than ever, it dawned on me that Brazil has much to be proud of. I am Brazilian, and therefore, admit to being a tad biased, but a decade of accelerated growth and progressive social policies has brought the country prosperity that is ever more widely shared. Unemployment in December was 4.9 percent, a little higher than the lowest on record. Credit is flourishing, particularly to the swelling numbers who have moved out of poverty into the middle class. Income inequality, though still high, has fallen sharply.

For most Brazilians life has never been as hopeful. Women's salaries are growing twice as fast as those of men, even though they only occupy a mere 21.4 percent of executive positions, despite the fact they hold most of the doctoral degrees in the country (51.5 percent) and dominate the area of research (58.6 percent). They also own more companies in the Latin American region (11 percent) than any other emerging country. The new shifts in the Brazilian economy also benefit the black communities, which have seen increases four times faster than their white counterparts, bringing the population of the middle class blacks from 39.3 percent to 50.9 percent. According to research conducted by the Federal University of Rio de Janeiro, of 20.6 million people who entered the workplace, only 7.7 million were white. Overall, the country is enjoying the boom brought by commodities, in particular oil and gas, despite the global economic slowdown.

Are American entrepreneurs taking advantage of this?

If not, they should, but with a caveat. What worked for the Brazilian economy 10 or 20 years ago — a focus on commodities, low labor costs, excessive focus on exports — won't work moving forward. Brazil is a new country, with new habits and customs, and a population that possesses an extremely elevated self-esteem. The rapidly growing Brazilian middle class, 52 percent of the population since 2008, is in love with itself and ready to spend.

Brazil is home to 31 percent of all Latin American millionaires, about 5,000 people with a net worth superior of $30 million. In 2003, there were 49 million Brazilians living in poverty. Six years later that number plummeted to 29 million as a result of government-sponsored social programs.

Brazil's primary challenge is education. The global economy has essentially become a knowledge economy, but Brazil has not adequately invested in education, despite the commodities boon. Recently, the federal government launched several promising educational programs, such as “science without barriers,” sending and financing several thousand higher education students to be educated abroad in the STEM (science, technology, engineering, and math) disciplines. Sadly though, the reality today is that approximately 80 percent of all corporate professionals in Brazil do not have a college degree — one of the lowest rates in the world.

According to a United Nations Educational, Scientific and Cultural Organization (UNESCO) report, only 35 percent of Brazilians between 25 and 34 have high school diplomas, which is three times higher than those between 55 and 64 years of age (11 percent). The new generation of professionals is not being educated quickly enough.

Still, in the past five years, there have never been as many Brazilians studying. In the past 10 years, 435 vocational schools were opened, and the number of universities jumped from 1.800 to almost 3,000, while the number of college students jumped 46 percent, reaching 6.5 million (the U.S. has about 20.3 million).

As we look toward the future, despite all its shortcomings, we are looking at a much more educated workforce in Brazil.

Hitherto, Brazilians did not believe in their country's potential and suffered from a certain inferiority complex. Now, they have several reasons to take pride in being Brazilian: the impressive economic boom of late, greater access to education and to information — Brazil is fifth in the world in Internet access, behind only China, U.S., India, and Japan — a democratization of the culture, and the recognition abroad of Brazil as an emerging country.

While there are a variety of different methodologies being used to study the relatively new field of Happiness Economics, or the efficiency with which countries convert the Earth's finite resources into wellbeing experienced by their citizens, the think tank company Global Finance has ranked 151 countries across the globe.

Brazil ranks 21st. Costa Rica leads the way and Vietnam is second, while the U.S. is 105th. Need I say more?

Dr. Marcus Goncalves is assistant professor of Management, chair of the International Business Program and director of Academic Programs at Graduate and Professional Studies, Nichols College, Dudley.